12 Principles and Statements of Buffett's Investment Approach

1、

Enterprise

1）Is the enterprise simple and easy to understand?

2）Does the enterprise have a continuous and stable operating history?

3）Does the enterprise have good long-term prospects?

2、

Management

4）Is the management team rational?

5）Is the management honest with shareholders?

6）Can the management resist inertia?

3、

Finance

7）Focus on return on net assets,

rather than earnings per share.

8）Calculate the true “shareholder earnings.”

9）Look for companies with high profit margins.

10）Every dollar of retained earnings

at least creates one dollar of market value.

4、

Market

11）It is essential to determine the market value of the enterprise.

12）Can it be purchased at a discount relative to its market value?

～～～～～～～～～

Insist that every investment object

has a margin of safety,

meaning the purchase price is below its intrinsic value.

This margin of safety creates a buffer for protection;

regarding the saying that “diversification can reduce risk,”

Warren Buffett believes that only those who do not understand what they are doing

need broad diversification.

If they have no idea about their holdings,

they should indeed buy many different stocks

and buy at different times.

In other words,

such people should invest or regularly invest in index funds.

Buffett points out: “On the other hand,

if you are not that kind of clueless investor,

then,

research some companies,

and find five to ten companies with long-term competitiveness

and reasonable prices.

Buffett makes you think: if the best companies you currently own

have the lowest financial risk,

and the best long-term prospects,

why are you investing in other companies ranked lower,

instead of in the best options?

Buffett believes,

it is very difficult for a person to make hundreds of correct decisions in a lifetime,

and making a few wise decisions is already enough.

**$COOKIE **$ATH **$HMSTR **